The rush to decipher human genes has triggered a money-making free-for-all akin to the claim- jumping disputes of the Gold Rush era.

But instead of racing to the land office, today's gene hunters stake their claims at the U.S. Patent & Trademark Office. Their goal: to prove that they were the first to discover a particular gene, and to win a 20-year monopoly on any drug or therapy that comes from it.

At stake is nothing less than which biotechnology firms and pharmaceutical companies get to control the genes that regulate many aspects of human disease and behavior.

Now, as it faces a backlog of 30,000 biotech patent applications, the patent office is proposing to change the rules that its examiners will use in evaluating who gets what out of the gene rush. And many leading genome companies are worried about the impact.

Biotech industry officials argue that gene patents provide a necessary financial incentive for companies that sink hundreds of millions of dollars into developing new treatments for cancer, heart disease and other ailments.

And since the 1980s, the patent office has agreed. A U.S. Supreme Court decision in 1980 allowed the first patent of a living organism, paving the way for genes to be patented as well.

The patent office has applied the same rules to genes as it uses for other inventions: it must be novel and useful. In the past, patent examiners have been liberal about interpreting usefulness because a useless invention hurt no one.

Early on, this test was not terribly difficult for gene-hunters to meet. Finding genes was tough work, like mining gold with pick and shovel. Scientists could work for years on a single gene, and by the time they filed for a patent, they usually knew what it did.

Starting in the early 1990s, however, gene hunters began using machines that could find genes automatically, even if the scientist operating the machine had no idea what that gene did.

Some scientists sought to patent these genes of unknown purpose, and at first the patent office smiled indulgently on their application. So long as the gene was new, it met the important prerequisite for a patent.

But many academic scientists, led by Bruce Alberts, president of the National Academy of Sciences, have argued that allowing patents on little-understood genes was contrary to the whole purpose behind patents -- which is to reward innovators.

Alberts argued that innovation occurred when someone used a gene to create a drug or therapy. If the patent office gave someone control over a machine-discovered gene of unidentified purpose, the patent- holder could demand royalties from the researchers who put the gene to work, which might discourage their innovation.

After years of bickering, the patent office has proposed adding three simple words to its guidelines. To win a patent, applicants will have to describe a "substantial, specific and credible" use for their gene.

Patent Commissioner Todd Dickinson still has not finalized the change. But executives in the gene- hunting firms are concerned about how patent examiners interpret the phrase.

"We don't want the definition of substantial use to be so specific as to be prohibitory," said Randy Scott, president of Incyte Genomics, a private firm in Palo Alto.

John Doll, who heads the patent office's biotech division, said the guidelines essentially group the huge backlog of 30,000 patent applications into three classes.

The first are genes isolated in a laboratory, whose purpose is likely to be known. Doll calls this "wet biology." Government and academic scientists have used wet biology to patent genes for 20 years. These are not controversial.

Another class of applications cover "naked DNA sequences." These were the sort of early, machine-generated gene discoveries that provoked alarm in the first place. The new guidelines rule them out.

The battleground is the large number of applications that fall in the middle. These are machine-discovered genes, but they aren't "naked sequences."

As the controversy over "naked sequences" festered, biotech companies got smarter about using their machines. When they discovered a new gene, they employed software that analyzed its structure and deduced its purpose. Doll called these "in silico" applications -- a reference to the fact that the gene's purpose was deduced through a computer analysis.

Doll declined to give a precise fix on how many of the pending gene applications fall into this gray area, but they probably constitute the vast majority because it is the speed of in-silico analysis that has allowed the private firms to file so many applications.

Government scientists, notably Alberts at the Academy of Sciences and Francis Collins, director of the Human Genome Project, continue to pressure Doll to reject applications based on "theoretical functions."

"These are hypotheses," Collins said in an interview with The Chronicle. "They could be right or they could be wrong."

Private gene hunters, on the other hand, believe that in-silico discoveries are "substantial, specific and credible" enough to win patents.

"It's not important that you understand the function of the gene (to get a patent), it's only important that it have a commercial utility," Incyte's Scott said.

Genes whose functions are only partly understood can be used to create diagnostic tests. For example, he noted the test for prostate disease comes from a patented gene, whose purpose scientists do not fully understand.

"I'm sure God didn't put it (the gene) there as a marker for prostate cancer, but it's useful for that nevertheless," Scott said.

Some activists, including Jonathan King, a microbiologist at the Massachusetts Institute of Technology, are circulating a petition online urging Congress to declare that human genes cannot be patented. But their effort hasn't gotten far.

So for now the only real questions are: How many of the gene patent applications will the government allow? And will they provide incentives to develop new drugs and diagnostics, or tie up important research in legal fights?

Rebecca Eisenberg, a patent scholar at Stanford University, said the Patent Office must be careful not to award gene discovery firms such broad patent rights that it scares scientists away from working to understand the function of genes.

"I want the patent system to promote scientific progress," Eisenberg said, adding that she would be concerned if she saw the office issue rulings that "allocate powerful patent rights at an early stage before a lot of costly work has been done to figure out what the (gene's) function is."

For his part, Patent Commissioner Dickinson is optimistic that his office will strike the right balance on a case-by-case basis. Every time science or technology has spawned a new industry, he said, critics have feared that patents would cause it to be stillborn.